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Monetary Conditions Index for India

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  • Kannan R

Abstract

The authors attempt to construct a monetary conditions index (MCI) for India in order to take both interest rate and exchange rate channels simultaneously into consideration while evaluating the stance of monetary policy and evolving monetary conditions. The paper also constructs a "broad" MCI which incorporates credit growth as an additional indicator of monetary conditions. Since the index is constructed using differences between actual and an “arbitrarily†chosen base period, the index only represents a relative degree of change and not an absolute measure. No significance is usually attached to the level of the index and it should not be interpreted too mechanistically. [RBI Occassional Papers, Winter 2006].

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  • Kannan R, 2007. "Monetary Conditions Index for India," Working Papers id:1273, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:1273
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    References listed on IDEAS

    as
    1. Eika, Kari H & Ericsson, Neil R & Nymoen, Ragnar, 1996. "Hazards in Implementing a Monetary Conditions Index," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(4), pages 765-790, November.
    2. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
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    Cited by:

    1. Jugnu Ansari & Saibal Ghosh, 2021. "Monetary Policy Pass-through, Ownership and Crisis: How Robust is the Indian Evidence?," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 15(4), pages 456-483, November.
    2. Rakshit, Bijoy & Bardhan, Samaresh, 2023. "Does bank competition affect the transmission mechanism of monetary policy through bank lending channel? Evidence from India," Journal of Asian Economics, Elsevier, vol. 86(C).
    3. Shuren Liu & Yimin Zhu & Qiying Hu, 2015. "Optimal Inventory Control and Allocation for Sequential Internet Auctions," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 32(02), pages 1-32.
    4. Bui Thanh Trung, 2022. "Measuring Monetary Policy in Emerging Economy: The Role of Monetary Condition Index," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(6), pages 499-522, June.

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